Gusler v. Fairview Tubular Products

• Decision Date: 30 December 1981
• Docket Number: Docket No. 63538,No. 1,1
• Citation: 412 Mich. 270,315 N.W.2d 388
• Parties: Karen GUSLER, Plaintiff-Appellee, v. FAIRVIEW TUBULAR PRODUCTS and Farm Bureau Insurance Group, Defendants- Appellants. Calendar
• Court: Michigan Supreme Court

Page 388

315 N.W.2d 388

412 Mich. 270

Karen GUSLER, Plaintiff-Appellee, v. FAIRVIEW TUBULAR PRODUCTS and Farm Bureau Insurance Group Defendants- Appellants.

Docket No. 63538.

Calendar No. 1.

Supreme Court of Michigan.

Argued May 6, 1980.

Decided Dec. 30, 1981.

Fred E. Foster, Gaylord, for plaintiff-appellee.

Davidson, Breen & Doud, P. C. by John Davidson, Saginaw, for defendants-appellants.

Conklin, Benham, McLeod, Ducey & Ottaway, P. C. by Thomas P. Chuhran, Detroit, for amicus curiae.

Robert W. Howes, Kelman, Loria, Downing, Schneider & Simpson, Detroit, for the Michigan Trial Lawyers Assn.

RYAN, Justice.

We granted leave to appeal in this case to consider whether the cost of living increases in workers' disability compensation benefits provided for in M.C.L. § 418.355; M.S.A. § 17.237(355) (hereinafter § 355) apply to the minimum as well as the maximum weekly rates for total disability as established in M.C.L. § 418.351; M.S.A. § 17.237(351) (hereinafter § 351).

At the time of her injury in March of 1977, plaintiff was employed by the defendant Fairview Tubular Products. She was a full-time employee normally working 40 hours a week at the then prevailing minimum wage of $2.40/hour for a weekly gross wage of $96. Deductions for federal and state taxes and social security reduced her weekly gross pay to $77.62.

Defendant voluntarily began paying plaintiff compensation benefits of $64 per week, a rate two-thirds of her gross wage of $96 per week, comporting with the general provision of § 351. Plaintiff petitioned for a determination whether she was receiving the proper rate of compensation under the formula prescribed in §§ 351 and 355 for a disabled employee with two dependents.

After consideration of the parties' claims, the hearing officer entered the following order:

"It is ordered that the matter has been submitted on stipulated facts and briefs and the singular issue as to whether petitioner is being paid voluntarily the correct amount of weekly benefits. I find that the Jolliff ¹ decision is applicable. The correct weekly benefit rate for petitioner with two dependents and an alleged injury date of 3-25-77 is the minimum of $96.00 per week pursuant to section 351 and the Director's annual adjustment. I interpret the stipulation of the parties to be, and I so order, that the defendant shall pay the correct rate from date of injury to the date of this order with credit for payments already made." (Footnote added.)

The director's annual adjustment is of course a reference to the provisions of § 355. The practical effect of the order in this instance was to award to the plaintiff compensation benefits which coincidentally matched her gross wages but which, in fact, paid her more weekly net income than she was receiving in her full-time employment, since the compensation award was not subject to tax.

Both the Workers' Compensation Appeal Board ² and the Court of Appeals ³ subsequently affirmed the increased award on the basis of the Jolliff case in which the Court of Appeals, in 1973, approved an interpretation of §§ 351 and 355 which would adjust minimum as well as maximum rates. Jolliff v. American Advertising Distributors, Inc., 49 Mich.App. 1, 211 N.W.2d 260 (1973).

I

The heart of the dispute is whether the legislature ever intended that the minimum benefit rates of § 351 were to be adjusted in accordance with § 355. We are convinced it did not.

Section 351(1), as applicable at the time of this injury, provided:

"(1) While the incapacity for work resulting from the injury is total, the employer shall pay, or cause to be paid as hereinafter provided, to the injured employee, a weekly compensation of 2/3 of his average weekly wages, but not more than $64.00, if such injured employee has no dependents; $69.00 if 1 dependent; $75.00 if 2 dependents; $81.00 if 3 dependents; $87.00 if 4 dependents; and $93.00 if 5 or more dependents; except as provided in section 355. Compensation shall be paid for the duration of the disability. Weekly payments shall not be less than $27.00 if there are no dependents; $30.00 if 1 dependent; $33.00 if 2 dependents; $36.00 if 3 dependents; $39.00 if 4 dependents; and $42.00 if 5 or more dependents; except as provided in section 355. Compensation shall be paid for the duration of the disability. The conclusive presumption of total and permanent disability shall not extend beyond 800 weeks from the date of injury and thereafter the question of permanent and total disability shall be determined in accordance with the fact, as the fact may be at that time." (Emphasis added.)

As is evident, there are two references subjecting § 351 to the adjustment provisions of § 355; one following the maximum and another following the minimum rates established for each dependency classification.

At the time of the plaintiff's injury, § 355 provided:

"(1) The maximum weekly rate in each dependency classification in this act shall be adjusted once each year in accordance with the increase or decrease in the average weekly wage in covered employment, as determined by the employment security commission. The average weekly wage in covered employment determined by the employment security commission for the year ending June 30, 1967, shall be the base on which such adjustments are made.

"(2) A second adjustment, if any, shall be made on January 1, 1970 and shall reflect the change, if any, between the average weekly wage for June 30, 1969 and the average weekly wage for June 30, 1968 and the adjustment shall be made in like manner on each January 1 thereafter, utilizing the average weekly wage for the preceding June 30.

"(3) Adjustment for the statutory maximum rate shall be made only if there has been an increase or decrease in the average weekly wage of at least $1.50 during the preceding year, applied to the June 30, 1967, base and the director shall announce the adjustment each December 1, to become effective the following January 1. If in any year the change is less than $1.50, the director shall announce no change for the following year but the amount of change in such year shall be carried forward and added to or subtracted from subsequent annual determinations until the total change shall be at least $1.50, in which year an adjustment shall be made. There shall be an adjustment made of $1.00 in the maximum rates for each $1.50 increase or decrease in the average weekly wage. The maximum weekly rate as so determined for the year in which the date of injury occurred shall remain fixed without further change as to the personal injury occurring within such year." (Emphasis added.)

In providing for the adjustment of benefits, the foregoing section makes reference solely to maximum rates on four separate occasions. Nevertheless, it is the plaintiff's claim, concurred in by the WCAB and the Court of Appeals and based on Jolliff, that the language following the minimum rates established in § 351 and subjecting them to § 355 should be interpreted as requiring an annual adjustment to minimum rates equal to any adjustment in the maximum rates.

We disagree with this interpretation and hold that no adjustment to the minimum rates prescribed in § 351 is authorized because none was intended by the legislature. We reach that conclusion because of 1) the legislature's failure to make specific provision for adjustment of minimum rates while explicitly doing so with respect to maximum rates, 2) an analysis of the history of the provision in question, and 3) the internal conflicts and plainly absurd results which plaintiff's construction of the statute would effect.

II

In construing the Worker's Disability Compensation Act, we are bound to effectuate legislative intent. Dyer v. Sears, Roebuck & Co., 350 Mich. 92, 85 N.W.2d 152 (1957). Our effort to discover the apparent intent of the legislature in this matter begins with an examination and analysis of the history of our present §§ 351 and 355, formerly M.C.L. § 412.9; M.S.A. § 17.159.

Prior to 1949 the general legislative scheme for workers' disability compensation provided for payments of two-thirds of average weekly wages and those payments could in no case exceed $21 per week or fall below $10 per week, without regard to the number of a claimant's dependents. Dependency classifications were added by 1949 P.A. 238 and both maximum and minimum rates were raised and provision was made for maximum and minimum rates in each classification. Subsequently, adjustments to both the maximum and minimum rates in each dependency classification were effected by 1952 P.A. 263; 1954 P.A. 175; and 1956 P.A. 195. Each time an adjustment to either the maximum or minimum rates was made, it was done expressly and by a separate legislative act.

In 1965, however, pursuant to 1965 P.A. 44, the legislature amended M.C.L. § 412.9; M.S.A. § 17.159, in a fashion designed to eliminate the need to adjust the compensation levels by separate legislative act every few years. It undertook to make maximum levels "self" adjusting with the aid of the Michigan Employment Security Commission.

Specifically, the pertinent provisions of 1965 P.A. 44, codified at M.C.L. § 412.9(a); M.S.A. § 17.159(a) read:

"(a) While the incapacity for work resulting from the injury is total, the employer shall pay, or cause to be paid as hereinafter provided, to the injured employee, a weekly compensation of 662/3% of his average weekly wages, but not more than $58.00 as of September 1, 1965, $61.00 as of September 1, 1966 and $64.00 as of September 1, 1967 if such injured employee has no dependents; $63.00 as of September 1, 1965, $66.00 as of September 1, 1966 and $69.00 as of September 1 1967 if 1 dependent; $70.00 as of September 1, 1965, $72.00 as of September 1, 1966 and $75.00 as of September 1, 1967 if 2 dependents; $77.00 as of September 1, 1965, $79.00 as of September 1, 1966 and $81.00 as of September 1, 1967 if 3 dependents; $84.00 as of September 1, 1965,...